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(The authors are Reuters Breakingviews columnists. The opinions expressed are their own)
By Una Galani And Hugo Dixon
DUBAI, Nov 15 (Reuters Breakingviews) - The noose looks set to tighten around the Syrian economy. Not only does the Arab League's move to suspend Damascus after its violent crackdown on protesters further isolate the country diplomatically. It may pave the way for crippling sanctions, which in some scenarios could shrink GDP by 10 percent, according to Capital Economics, a London research boutique.
Although the Arab League is considering sanctions, it hasn't yet agreed them. What's more, its decision to suspend Syria's membership wasn't unanimous: Lebanon, Iraq and Yemen, which collectively account for 20 percent of Damascus' trade, voted against the suspension or abstained.
But 18 countries did vote for suspension, which then led to attacks on some of their diplomatic missions inside Syria. That will probably have hardened their line. These countries account for 23 percent of Syria's trade. Meanwhile, non-Arab Turkey could now move ahead with its own threat of sanctions. It makes up a further 7 percent of trade.
The Arab League action follows sanctions by the United States and the European Union which blocks the purchase of Syrian oil exports and includes travel bans on individuals including President Bashar al-Assad. The two countries accounted for 25 percent of Syria's total trade in 2010, according to the European Commission.
Syria's economy is already showing signs of strain. The currency has lost 10 percent of its value against the dollar on the black market since the start of the uprising as a result of capital flight. It is unclear how much is left of Syria's pre-crisis foreign reserves which were estimated at ${esc.dollar}18 billion.
The Arab League also said it was willing to turn to the United Nations if the killings do not stop, potentially leading to wider sanctions. China, which has hitherto opposed U.N. resolutions criticising Damascus, said it backed the League's position. That leaves Russia as the only major power supporting the regime. Of course, even if Moscow changed its tune, it would be hard to maintain a total blockade on Syria given its long leaky borders. But the heat would certainly be on.
CONTEXT NEWS
-- The Arab League voted on Nov.12 to suspend Syria and said it would consider imposing economic and political sanctions on Damascus.
-- Out of the 22-members of the League, Iraq abstained, while Yemen, Lebanon and Syria voted against the measure.
-- The League has appealed to its member states to withdraw their ambassadors, said Qatar's Prime Minister Sheikh Hamad bin Jassim al-Thani after the weekend meeting.
-- China called the move an "important step" and the country's Middle East envoy, Wu Sike, called on Syria to speed up reforms saying the bloodshed could not continue.
-- Russia said it opposes Syria's suspension and described the action as counter-productive.
-- China and Russia have resisted a Western push for a U.N. Security Council resolution condemning the Syrian government.
-- U.S. President Barack Obama praised the League's move and France said it was time for international bodies to take more action against Syria's government.
-- Syria's foreign Minister Walid al-Moualem described Washington's welcome of the Arab League move as "incitement". He apologised for attacks on the Turkish, Saudi Arabian, Qatatri and French diplomatic missions in Syria after the suspension was announced.
-- Reuters: Syria faces growing world pressure to halt bloodshed
-- Reuters: Syria says Arab League suspension "dangerous step"
-- Reuters: EU extends Syria sanctions, stops EIB funds
-- For previous columns by the authors, Reuters customers can click on and
(Editing by Hugo Dixon and David Evans)
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